Turner & Townsend report predicts global market to have “best year since the financial crisis”
International construction markets are expected to enjoy their best year since the financial crisis in 2014, according to a new report by Turner & Townsend.
The global consultant’s International Construction Cost Survey 2013 report analysed prospects for 23 countries’ construction markets and determined 13 of these will see more construction projects start in 2014 than in the previous year. It was the first year since 2008 that the majority of countries were projected to develop more rather than less in the coming 12 months, according to Turner & Townsend (T&T).
Those countries expected to increase development included the UK and three nations set to host the football World Cup within the next decade; Brazil, Russia and Qatar.
China and India were among the nations expected to develop less over the coming year compared to 2013, due to slowing industrial development in China and rising interest costs and fewer public and private projects in India.
T&T’s report also predicted which countries will be most affected by construction cost inflation over the next 12 months.
South Africa will be hit worst, according to the report, with tender prices expected to rise 9% over the period, due to large annual trade wage increases, increased demand for local materials and higher material import costs.
T&T also forecasts Brazil and India will face high inflation, with 7% cost increases predicted, while Hong Kong can expect a 6% increase.
The UK is expected to fare comparatively well, with 3% construction cost inflation expected this year, alongside Germany, Canada, Singapore, Malaysia and South Korea.
Ireland, the Netherlands, the US, Australia, the UAE, Oman and Poland are expected to experience the lowest construction cost inflation at 2%.
The report also revealed the typical profit margins for contractors on commercial jobs in each country.
Contractor margins are highest in India, where firms typically make a 16% margin, followed by Uganda and Qatar, where the typical margin is 15%.
The lowest margins of 2% are made by contractors in Canada and Ireland. The UK also ranks toward the bottom of the pack, with contractors typically making a 4% margin, in common with contractors in the USA and Australia.
T&T chief executive Vince Clancy said: “After an unprecedented period of global economic instability, things are beginning to slowly improve.
“Many markets remain fragile but it’s clear that sentiment is improving. With recovery comes opportunity, and some key markets around the world are showing sustainable signs of growth.”